Booming Trade Relations Between India and France
This blog post has been authored by Purujit Dash, International Business Analyst, Manasa Kaderi, Trade Intelligence Intern, at Arthashastra Intelligence
India and France have maintained 26 years of strategic relations since 1998. France has emerged as one of the major sources of FDI for India with more than 1,000 French establishments already present in India with a cumulative FDI stock of US$10.54 billion from April 2000-March 2023, which represents 1.6% of the total FDI that flows in India. Trade relationship between France and India have witnessed a steady growth, with the trade marking an impressive US$13.4 billion FY 2022-23, and achieving a significant 7.72% increase from the previous year. India and France have signed an MoU on January 25, 2022 with a scope for cooperation in health research.
Indian Exports to France
Major items exported from India to France include petroleum and oil, medicines, Turbojets, propellers and others, Telephone sets, Jewlery articles, Aircraft, Garments, Possessions, Automobiles, Diamonds. India’s export to France stood at US$ 1.06 billion during April-May 2023. The 18th Joint Economic Committee meeting, held virtually between the two countries on November 27, 2020, led to the signing of a bilateral ‘Fast Track Mechanism’ for investors. The above graph represents the top 10 exports from India. India’s total exports in 2022-23 were US$ 451,070 , out of which US$ 7,610 constituted the exports of France alone.
Indian Imports from France
The graph illustrates the top 10 commodities imported from France. The partnership between India, the world’s largest democracy, and France, a major European power, carries substantial weight in global affairs and serves as a platform for dialogue on regional and global challenges. In November 2022, India and France discussed the defense collaboration and explored further opportunities under Atmanirbhar Bharat. The collaboration extends to joint ventures, investments, and initiatives in multiple sectors, underscoring the depth of the economic ties between India and France. Ongoing developments in trade policies and global economic conditions may continue to shape this import-oriented relationship.
India’s top export to France was majorly petroleum and oil products one of the major reasons for that is India’s current access to Russian crude oil which the other countries are avoiding due to the imposed sanctions which has increased the Indian petroleum imports. Over the past few years leading oil economies like Iran are facing sanctions, which impacts the stability over import and export of not just India but also European countries like France, due to the price restrictions on transport and insurance. India ranks 22nd in the global oil producing countries but oil exports are closely linked to volatility of the crude oil prices, India in general saw an increasing trend of oil exports due to the rising global prices in the heat of the Russia-Ukraine War.
France is the leading producer of Aviation technology, which is why India relies on France to import majority of the turbo-jet engine parts, at the same time aviation fuel is the lifeline for aviation technology which is one of the important exports from India. Oil trade is known to be highly influenced by geopolitical impacts, sooner or later there will be a time where the sanctions imposed on major oil economies like Iran and Russia will be lifted and India will have to compete for Russian oil, therefore, due to geopolitical considerations, India has been trying to expand its markets by trying to import petroleum from European countries like UK, France, and Belgium.
As per the Economic Survey 2022-23, India is the 3rd largest producer of pharmaceutical products by volume and 14th largest producer of pharmaceutical products by value, which is why medicines are the second most exporting commodity from India. India’s pharmaceutical exports to France and other European countries are significant, with Europe being a major market for Indian pharmaceutical products. The demand for Indian medicines in France is high, making it a key destination for exports from India.
Europe is a region of great geopolitical significance for India at the same time is a quite complicated landscape. Such a bilateral partnership with India is of strategic importance. India and France have strategic partnership of 25 years since 1998. Extending this bilateral partnership through a Free Trade Agreement (FTA) signing would lead to a significant rise in trade.
References: WITS, https://www.ibef.org/indian-exports/india-france-trade